Russia, Home of the Next Silicon Valley?

Matthews, Owen, Newsweek

Byline: Owen Matthews

For all its inefficiencies, the Soviet Union had something to teach modern Russia about economics. The communists lavishly supported science and technology, and as a result Russia put the first man in space in 1961. But since Yuri Gagarin reached orbit, the country's investment in science has fallen from 6 percent of GDP to just 1.5 percent today. That's part of a broader technological stagnation. The brain drain that began in the 1970s with the emigration of educated Soviet Jews--like the parents of a young Sergey Brin, who went on to invent Google--had by the turn of the century robbed Russia of more than half a million of its most talented people. In 2009 Russia published fewer scholarly papers and journals than India or China. If current trends hold, Russia will be importing, not inventing, the breakthroughs of the coming century.

Dmitry Medvedev, Russia's forward-looking president, wants to alter this gloomy prospect, and has staked his credibility on building a 21st-century economy to liberate Russia from its "humiliating" reliance on oil and gas exports. The centerpiece of his plan is the "innovation city" of Skolkovo, now under construction outside Moscow. By 2014 the new city is to house up to 40,000 people and serve as kind of a Stanford in Russia, a place where academic brains mingle with private and government money to launch startup companies and, it's hoped, to give rise to the next Silicon Valley. …

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